Being British is not usually a
qualification for balanced comment on the state of the European Union and,
particularly, the Eurozone. However, UK nationality and residence does provide
an interesting vantage point on the Euro’s problems, particularly for those of
us who are instinctively pro-European. Unlike in more traditionally
pro-integrationist countries, supporters of the EU have had to try very hard to
justify pro-European arguments to a largely sceptical population. Ignoring the
risks and costs of EU membership has never been an option.

For a long time, the EU had a ‘free pass’
in countries with strongly Euro-enthusiastic elites and public opinion: in
Spain, for example, EU and Euro membership were widely perceived as a symbol of
democratization and economic, social and cultural modernization. In Italy in
the early 1990s, I was asked why my country didn’t want to ‘conform with’ (‘adeguarsi
a’) the EMU project. The notion that EMU might not be self-evidently in every
country’s interest appeared contrarian and rude. Pro-European Britons found
themselves in the awkward position of apologizing for their government’s
uncooperative and narrow-minded views. For that reason, like many others on the
left, I found myself warming to the Euro idea for the simple reason that most
of my political enemies hated it.

So to find myself looking at the Euro mess
both from outside (Britain) and from the frontline (Italy and Spain) is awkward
and embarrassing. The British Euroskeptics have been proved right (although
mostly for the wrong reasons), whilst the Euroenthusiasts of Southern Europe
have been hung out to dry. After enjoying a period of historically low interest
rates, periphery countries have run up debt and allowed wages and prices to get
too high. The causes of this situation were in large part out of their control,
but they are being asked to resolve it on their own, through austerity and
deflation. Meanwhile Britain, whose structural economic problems are in many
ways worse than those of the Eurozone periphery, has the safety valve of
devaluation and debt monetization. We may be punishing ourselves with our own
brand of austerity, but at least we have no-one else to blame for this but ourselves.

The Euro’s economic failings are by now
well documented and widely discussed, although policy-makers appear reluctant
to take notice of them. Less attention has been paid to the political dimension
of the Euro crisis, yet the politics of this are crucial. The enlarged European
Union and the Euro are typical products of the institution-building style of
Euro-integrationists: they are opaque, have no serious electoral chain of
accountability, and they exclude a wide range of policy options from consideration.
Europe has been an essentially elitist project, forged through technocratic
measures whose ultimate political and economic consequences were downplayed or
excluded entirely from public debate. European issues have been mostly absent
from national election campaigns, and national politicians have been careful to
avoid open debate on the implications of European policies and institutions.
When voters have protested, the response has been either to pose the same
question again, or to ignore popular decisions and seek other means of
achieving the same end.

This democratic deficit is partly
responsible for the Euro fiasco, because Euro membership and its possible risks
where never properly debated either in national-level or European-level
electoral contests. Because of the technical nature of some of the issues
involved, it was the responsibility of political parties to articulate the
problem in ways which would have allowed voters could make sense of the
implications for them. Was the risk of brutal austerity measures or internal
devaluation ever mentioned by parties and unions on the left in Eurozone
countries? Was the likelihood that Eurozone policies would be dominated by one
country ever mentioned in partisan debates in the European periphery? The
current mess reflects not only a failure of imagination on the part of
economists, but also on the part of elected politicians and union leaders, who
largely signed up blithely to an economic policy consensus which is now
brutalizing their constituents.

If the Euro – and possibly the European
Union itself - is going to survive in its current form, new mechanisms for
democratic accountability are going to be necessary. First, because clearly
periphery countries can’t be expected to experience a return to the living
standards of the 1970s or 1980s, simply because undemocratic institutions such
as the European Central Bank or the Commission tell them to. Even if this were
normatively acceptable, it wouldn’t be politically feasible – some kind of
major bailout, of a kind that dwarves current arrangements, will certainly be
needed, or the periphery countries will default and/or leave the Eurozone
system, with disastrous consequences for everyone else. But the lack of
democracy in the Eurozone’s institutions makes this kind of stand-off
inevitable, running the risk of an outcome that is terrible for both core and
periphery.

The second reason democracy is going to be
necessary is that just as the periphery can’t be expected to suffer in silence,
neither can the ‘virtuous’ countries be expected to enter into potentially
open-ended transfer arrangements with the periphery without some kind of popular consent and control over the way in which transfers are managed. German
governments and banks may not be deserving of much sympathy, but German workers
who have accepted real wage restraint and in some cases the loss of both income
and rights over the past decade or so should not be asked to bail out people in
countries that have not shown the will to make such sacrifices. If Europe is to
become a welfare state – and it’s hard to see how monetary union can survive if
it doesn’t – then there needs to be accountability. There needs to be European democracy. Otherwise, there will be
nationalism and collapse.

Trouble is, what democracy? One of the
reasons the democratic deficit has been ignored over the years is that there are
obvious obstacles to doing anything about it. Europe is not a ‘demos’ – it
doesn’t have a common language, and its political representatives are either
responsive to mainly national-level electorates, or in the case of the European
Parliament, largely disconnected from their electorates. However, the EP is
probably the only valid starting point for democratization – there is a kind
of party system, national political parties have built coordination mechanisms
and working relationships, and even though it will probably never be a party
system like we find in nation-states, it is the only workable option on the
table.

The Commission, the Council and the ECB
need to come under the direct control of the European Parliament. Voters, in
time will start to take European elections seriously, and national political
parties will have to start representing their constituents’ specific interests
in both national and European institutions. Easier said than done, but has
anyone got a better idea?